If approved by the NA, the higher threshold for personal income tax suggested by the Government should be applied sooner than the currently proposed July 2013, most NA deputies in Ho Chi Minh City said, adding they also wanted the tax deduction to be higher than proposed. At yesterday’s meeting of the HCMC's NA deputy delegation on the proposed amendments to the revised Law on Personal Income Tax, many deputies said the new tax threshold, VND9 million (US$430) a month, which is VND5 million higher than the current threshold, should be approved and then applied soon for the sake of tax payers. Tran Du Lich, deputy head of the delegation, said the new threshold should be applied in January 2013 instead of six months later, since the Law is not a new one but is a revised one. On the other hand, such a sooner application will benefit taxpayers and facilitate the tax management by tax authorities. He also demanded that the proposed highest tax rate (35 percent) for people with income of more than VND80 million per month be abolished since it is too high and the number of such people accounts for a very small proportion of the country’s population. Tran Hieu Liem, deputy head of the Employment, Salary and Wage Office under the HCMC Department Labor, War Invalids and Social Affairs, said, “The consumer price index (CPI) next July will be much higher than now, so if the new threshold is applied at such a time next year, it should be VND10 million, not VND9 million as currently proposed.”

A meal of a family with total income of VND6-8 million per month in Hanoi. Many NA deputies propose the higher threshold for personal income tax should be applied soon.  (Photo: Tuoi Tre)

VND4.5 mil deduction proposed Under an amendment to the Law, taxpayers will be allowed to deduct VND3.6 million per month for each dependent they have to take care of, while the current rate is VND1.6 million. Dependents are those who earn less than VND500,000 a month. However, Liem said the VND3.6 million deduction is not enough to pay expenses related to a dependent, based on the actual cost of living. He suggested that the rate be VND4.5 million per month. Vu Huy Hoang, a deputy in Binh Chanh District, said, “Consumer prices are currently 40 percent higher than those five years ago, so the NA should approve and apply an appropriate deduction rate soon for the sake of taxpayers.” Hoang also proposed that a specific deduction rate be applied for Hanoi and HCMC since the cost of living in these two cities are much higher than in other localities. According to an amendment to the Law, the deduction rate will be adjusted when the inflation rate is higher than 20 percent, but many other deputies wanted such regulation to be more concrete: how long will a deduction adjustment be made after such an inflation rate is recorded? As scheduled, amendments to the Law will be submitted to the NA for consideration this month, and if approved, they will take effect in July 2013.